This is the fifth and final post in a series to guide nonprofit leaders on what it takes to thrive in their digital transformation journey. These ideas leverage research from MIT’s Center for Information Systems Research (CISR) complemented with The Center for the Digital Nonprofit studies of the digital transformation experience of nonprofits gained through our open tools and guidance such as the Digital Nonprofit Ability™ (DNA), the Digital Nonprofit Skills™ (DNS), and the social sector accelerator of Imagine, Design, Execute, Deliver™ (IDEA).
No matter the path chosen, the business model adopted, or the capabilities gained, nonprofit organizations will have to face difficult moments of truth along their journey—moments that hold a high potential to disrupt the organization. How these are resolved and overcome will make the difference between success and failure. The following moments of truth are the hardest to manage for nonprofits and that can disrupt all levels of an organization:
Decisions in organizations have been described as complicated, but in highly distributed organizations, such as federated nonprofits, they quickly grow to be extremely complex.
Dr. Shelley Taylor of the University of California Los Angeles (UCLA) discovered the phenomenon known as “What is Focal is Presumed Causal”. When we focus our attention on something, we don’t see anything else. The opportunity cost of paying attention is unintentional blindness—we don’t consider other options. This becomes critical in decision making. For example, if our attention is focused on implementing headquarter systems, we may not notice to what extent the field is digitizing. If we are working side-by-side with beneficiaries, we may forget to what extend good data collection can shape future funding from HQ.
For breakthrough performance, digital transformation decisions must involve all levels of the organization and thus leaders manage through the difficulties presented by the focusing illusion. When people are dispersed over the world—this is hard.
Decision rights is the first critical moment of truth to overcome and inattentional blindness makes it extremely difficult to address in large nonprofits. This is because it demands not only that everyone share the same reality of digital transformation (e.g., shared culture, values, beliefs, and assumptions), but also that changes be made to the status quo of who makes and who is accountable for key decisions, such as how funds are allocated, or which programs are tested, for how long, and what is discontinued. Key questions demand to be resolved through difficult conversations across the organization: should consensus-based decisions be continued or abandoned, and if so, for what? Who should be involved in digital transformation decisions, and to what extent? How can our nonprofit balance entrepreneurial decision-making by individuals and teams with the need for organizational alignment and mission coherence? These will be already familiar to the nonprofit leader who has started the digital transformation journey. Note that our DNA research has identified that the People category is holding us back. As decisions rights are influenced by culture and skills, this is why this question is paramount to address first.
There is plenty of evidence that the digital era creates and demands new ways of working. In studying Digital Nonprofit Skills (DNS), The Center diagnosed that the sector, on average, lags in many ways of working necessary to perform well in the digital economy. This is particularly true with agility and test-and-learn behaviors that are seldom experienced in our organizations due, in part, to the constraints of funding models.
One of the most difficult actions for any nonprofit to perform is organization surgery. It can impact morale for decades. The nonprofit sector experiences long employment tenures, transforming colleagues into family. By the nature of our work we hold high levels of empathy. These traits make us hypersensitive to layoffs or department closures which unfortunately may be necessary steps to accelerate change and bring us on the path to success.
Adopting a platform mindset is already starting in parts of the sector. There are large organizations that have made it their core strategy for 2030 and The Center is working with them to accelerate it. The NetHope Security Working Group is also focusing on sector-shared platforms with positive early results. Technology vendors such as Blackbaud, Box, Microsoft, Okta, Oracle NetSuite and Salesforce have shown that there is a platform market in our sector. Yet we see even more potential for the sector to take current models such as the NGO Reference model, or the Common Data Model, and to make them real through platforms that we can all use and advance at lower costs than bespoke systems. We all need to collaborate on platforms.
We hope that this series has been helpful in giving you guidance to orient your digital transformation journey and that it has equipped you with some tools to move forward more easily than left on your own. The six leadership questions will shape rigorous conversation among leaders, and we welcome being part of them or hearing the answers you want to share. We hope the four pathways become a roadmap that give you confidence to proceed and options for your journey. Capabilities of the organization should be looked at with brutal honesty and mitigated before pushing forward on each steps of the digital journey, and we are here to help. Finally, we have faith that knowing in advance about the four moments of truth that can disrupt your organization will help you be better prepared as you encounter them.
The Center for the Digital Nonprofit will continue to openly provide resources, tools and guidance that can benefit NetHope members and all nonprofits accelerate their digital transformation journey. We look forward to your continued collaboration.
Part One in the series: What it takes to thrive in the digital transformation journey
Part Two in the series: Digital challenges and opportunities
Part Three in the series: 4 pathways to digital transformation
Part Four in the series: 4 business models and 8 key capabilities
Part Five in the series: 4 moments of truth